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Mar 21, 2009 at 06:02 PM |
Asset security has always been important to any business.
Traditionally we think of Assets as being things we can touch and see.
But, increasingly a group of your most valuable Assets are some which you probably haven't given much thought to before today because, by their very nature, they aren't visible, ...you can't see them and touch them.
I'm referring to Intellectual Property Rights (IPR); Copyrights (C); and such as Domain name Rights and Registrations.
With the ever increasing importance of online trading, NOW really is the time when you should ask yourself.... 'How safe are my Assets?'
The last thing any owner or manager wants is to find that all their time, effort and money invested in building up a particular asset has been destroyed through the greed and/or dishonesty of others.
We are all used to terms such as 'shrinkage' ...that infamous euphemism for sheer unadulterated bloody-minded thievery by those we employee and pay good money to each week; ... but, 'shrinkage' although damaging, is at least and usually traceable and, to some extent, visible.
With the continuing rise in importance and value of such as IPR and Copyrights, thefts and subversion of these expensive assets can be a lot more difficult to determine. Often by the time any threats are fully recognised it has effectively become 'too damned late' to avoid the costs.
If you should find usurped or misappropriated intellectual Assets the impacts can be not only extremely severe, but even potentially terminal for your business.
Because the crooks in this category of (sic)'white-collar crime' are mainly the people we work beside in our offices; (rather than distant or unrecognisable employees in a store or warehouse); the actions, when uncovered, tend to cut us even more deeply. None more so than if the warning signs were there for some time, but you decided to ignore them until it became just too painful to continue with the delusion that said... "... Johnnie isn't that sort".
You wouldn't be alone if you are reading this now and thinking "Bugger! .... I wish I'd acted sooner".
Many business people like to think that they are hardened to the ethos of 'being in business'. Many of us like to imagine that as the saying goes ...'there are no flies on us'.
But, the truth is that we all need and want to think the best of those we elect to keep around us.
Each of us is reluctant to act at the first hint of a problem, and we often chose to ignore the warning signs and also fail to take the necessary steps to protect our property.
As human beings we don't want to think the worst of people. Especially not those employees and colleagues we come into contact with day-in and day-out, ...perhaps over many months or years of very close cooperation.
But, such an approach, whilst perhaps understandable; ...maybe even laudable from a social perspectives, is, in reality, crass stupidity of the grandest order.
Eventually the light of recognition becomes so blindingly bright that it shines through even the thickest of 'blinkers'.
It is then that we feel personally hurt and betrayed; ...often more because our trust and pride has been injured than for the pure monetary impacts.
But, with the increasing importance of these hitherto invisible assets, the damage to your pride may become so immaterial that it takes on the mantle of being truly insignificant.
Sooner, rather than later, as online businesses grow, the financial and strategic impacts of failures to secure your most valuable assets may signal the end of your entire business.
A particular case has been brought to my desk over the past weeks which demonstrates the warning signs which if unchecked could leave you vulnerable and financially damaged or destroyed.
I'm involved with a few Clubs and Societies relating to the preservation and use of our engineering heritage.
One of these Clubs at this time is undergoing what the Diplomats would describe as, "a little local difficulty", (a particularly dirty little War to you and me).
Because of the nature of 'the War', and the possibility that it will all end up in the Courts, I can't be too descriptive. But, like many others associations and clubs throughout the land, this friendly little club moved to become a Company Limited by Guarantee a few years ago in order to better protect itself from the effects of potentially mindless litigation.
...You know the sort of thing; ...the Blagger who thinks they can get enough to pay for a week of alcoholic stupor in Benedorm, by suing for sticking their podgy fingers into something that any mentally-deficient 8 year old is yet capable of realising might cut/burn/scratch. The sort of thing that 20 years ago would have been laughed out of the Solicitors offices, - let alone out of Court.
In other words it shares the same legislation for management, protection, and Governance as traditional and commercial businesses.
Your business for example.
The events which have unfolded within this Club albeit, we would hope, being somewhat extreme, could easily be replicated in your business tomorrow; ...or possibly even now whilst you are reading this.
This particular case is so worthy of example because it underlines that the enemy-within may actually be a lot closer to you than you might reasonably imagine.
In this Club, the (alleged) culprit(s) of this attempt to usurp and purloin the legitimate assets of this limited Company appear to be one or more of it's own Directors. The very people any right-minded person might be forgiven for thinking would be above suspicion of wrong-doing.
In brief ...the background to these events are that the existing Board were seeking, amongst other things at the AGM, to bring about quite substantial changes to the Governance of the Company. Their motives for such were unclear to the membership; and the Board were more than simply reluctant to answer legitimate questions from the membership, such as:
"What problems are these changes designed to mitigate?" ... and
"Specifically, what legal questions were asked of the expensive Lawyers used by the Board in the run up to the AGM?"
A group of members then had become deeply suspicious of the motives behind these moves. Especially when confronted with a Board which seemed to believe, and which stated publicly, that they had every right not to be "dictated to" by the legitimate owners of the Company (the membership in general); ... and bluntly warned that if the changes weren't voted for at AGM that they would resign en-masse.
Of particular note is that one of the Directors was also the Club librarian charged with looking after the reference material donated to the Club; ...was also the Editor of the extremely popular website; ...as well as the Editor of the Club's magazine. Obviously a very powerful position to be in for the purposes of controlling communications; and also a position which had vested in it considerable elements of trust.
At the AGM the existing Board carried out their threat to resign when it became clear that the changes they advocated were not going to be simply accepted without discussion, comment, and formal approval.
Within hours of the closure of the AGMs the now redundant ex-Directors made claims that they were the true guardians of the Club's future (despite having resigned in the same petulant manner as a small child who throws 'teddy' out of it's pram) and seized control of the running of the Club's website; ... which the Editorial Director had declared, during the AGM, to be his personal property. He further made bold statements referring to his intention to continue to control the website for many years to come.
This group of now former-Directors then began to use the assets of the Company (membership lists, etc) to contact as many of the membership as possible in order (it seems) to convince those not present at the AGM that the new Board Members were illegitimate; and that the existing Club was to be wound-up. Further, that a new Club, (with the same controlling group as had resigned, but now without any legal Governance of any kind) was being created.
In addition to the allegedly unauthorised use of the Club's website, the outgoing Directors and Company Secretary appeared to take every opportunity to hamper the work of the new Directors. It being stated that initially, and until legal letters had been exchanged containing the usual threats and reminders of Duty, the now ex-Company Secretary was refusing to return any of the Accounts, Ledgers, and Minutes of the Company to the Board.
All of this background noise is interesting, ...in the same way that people find slowing down to see motorway crashes, .... interesting. But, the singular most damaging aspect of all was that the departing Directors, and in particular the former Website and Magazine Editor maintained control of the communications channels of the existing Club, even having the temerity to claim that that which the Company had paid for, ... that which he had been paid an annual stipend to manage on behalf of the Club, ... was now deemed to be his personal property.
This person (I'll call him Mr.X.) and his ex-Director colleagues appear, even now, to be using the assets of the Club against the existing Club's interests in order to foster the creation of their own 'new' Club.
To say that this affair has become acrimonious is to understate the facts, many of which I simply cannot comment upon for the obvious reasons.
But, there are serious lessons to be learned from this for all Directors and Owners of businesses.
The most important of which is that you simply MUST take early actions to protect your assets.
You simply must be completely ruthless whenever you see the first hint of troubles, because it is far easier (and important) to cut off abuses at the source than to attempt recovery later.
The effect of not taking actions early enough, are now being felt very deeply by the membership (owners) of the legitimate Club.
The fact that the Editor was also a Director makes this situation potentially more damaging and costly for the Club to recover from.... but the 'Lessons to be Learned' apply regardless of the employment status of the person trusted with control of your Intellectual and Domain Rights.
The Club now finds itself; ...through no direct fault of it's own other than misplaced Trust in it's elected Directorate by the membership at large, ...and a failure to recognise the warning signs which were only too self-evident;...with 'hindsight' which is such a wonderful tool); ... in the situation where:
- ... it has lost control over the content of it's own website
- ... it is facing a battle over it's very existence
- ... it is now facing a costly legal claim to wrest control of it's own domain name from the hands of the former Director/Editor
- ... it has allegedly suffered the loss a valuable part of it's reference library, which was presumed to be in the safe hands of the Librarian-Editor Director
- ... it has suffered serious loss of income from the membership renewals, ...(the records of members is as yet to be returned to them meaning they cannot process renewals)
- ... until it regains control of it's domain name, it has lost it's links on search engines such as Google, Yahoo, etc; (i.e. every search for keywords associated with this Club still point to the existing Domain name which is now being used by the former Editor to promote his own Club.
- ... the Club's own public forum for member's communications are out-with their day-to-day control; and, it is alleged, have been used to sponsor the existence of this new alternative club.
All of which, whilst happening to a non-commercial Club, could apply to your Company/Business with only a few minor tweaks of the history.
You should bear in mind that the person in day-to-day charge of your assets, and in a similar position of trust to the above, doesn't need to be a Director. They could be someone quite lowly in your management chain.
All that it needs is for someone to have the inclination to feather their own nest at your expense; ...and to possess the basic knowledge of, and access to, (for example) the registration processes of your valuable domain names; ... and they can quite simply usurp their position, purloin your assets, ...and inflict lasting and expensive damage upon your business and reputation.
In the case of the Club the warning signs were there to be witnessed, but nobody wanted to believe that this elected Officer of the Company would so blatantly set about relieving the Club of it's most valuable of all assets.
The history of this is worthy of example; ...not least because it demonstrates that this type of abuse doesn't need to be a sudden event.
In the case of the Club the situation was allowed to develop not over weeks or months, ...but years.
It is my opinion (based solely on what little and incomplete evidence I have been allowed to view) that the situation with the Club came about mainly because the alleged perpetrator had managed to avoid confrontation over his actions in the early days of his involvement. This had bolstered his confidence to the point where he now believed himself to have the upper hand and played his final card by stating at the AGM that the website was his personal property.
How had this come about?
Here's the history, as I deduce it, based upon our investigations on behalf of the new Board.
2004: Mr.X. volunteers to take on the role of website and magazine editor
2004: The Club (for whatever reason) fails to renew it's Domain name which is instantly registered to an off-shore and untraceable 'owner'.
2004: Mr.X. in his capacity of webmaster and editor registers for the Club a new Domain name. (CLUB MISTAKE #1)... it is only now some year later when the War has started that the Club recognise that Mr.X. actually registered the Domain name in his own name rather than that of the Club.
2004: Club website is published. It is accessed via the domain name (which had been 'supposedly') registered for the Club, and the website clearly proclaims it's Copyright notices stating the ownership of such is vested in and reserved to the Club.
2004-06: The Webmaster is increasingly viewed as the controller of the website and magazine. The website proves more popular than anyone previously imagined. The number of visitors grows considerably year on year.
2006: The website front page acquires a curiously worded introduction which reads... (paraphrasing somewhat) '...welcome to Mr X's pages on this website which hosts the website of the Club...' (CLUB MISTAKE #2)... nobody .. nobody challenges Mr.X. on his inappropriate wording, deciding instead to grant the benefit of doubt, and applying the belief that "Mr.X. doesn't mean anything by it.... he's not that sort"
The Copyright in the contents and site are still declared to be the property of the Club.
2007: The wording is changed yet again to become (sic)...'welcome to the website of Mr.X. .... where we host the website of the Club'. The wording of the Copyright is overnight changed to read 'Copyright of Mr.X. All rights strictly Reserved'. (CLUB MISTAKE #3)... again nobody challenges Mr.X. on his infringements of the original Copyright holders Rights.
2008: Mr.X. claims that the domain name and website are his. (CLUB MISTAKE #4)... the majority of existing Directors, who it now seems are on a collision course with the membership, appear to fail to record any challenge on this (some might think) blatant abuse by Mr.X.
2009: Mr.X. and the majority of the Board resign en-masse at the AGM where Mr.X. repeats his claim of proprietorship over the Domain name, Website and associated assets of the Club; and within 72 hours have set-up the creation of their own non-legislated Club.
So, where does this nightmare scenario leave you as an independent Business Owner and/or Director?
Probably wondering what you should do to ensure that something similar isn't allowed to happen to your organisation.
If such is the case, then I suggest that you need to ask yourself three basic questions today:
1) "... have I seen anything recently relating to invoices for unrecognised items relating to the operation of my website?" ... no matter how insignificant; and even if they were subsequently 'explained'.
2) "... has anyone spotted any inexplicable wording on the website, which seemed to be a 'bit odd'...?"
3) "... am I positive that the person I have entrusted to look after my IPR, Copyright, and Domain assets has registered all my Company assets solely in the name of the Company?"
If you have any suspicions at all about any of the above I suggest that you get professional help and assistance as soon as possible.
In fact, pick up the phone today and give me a call. I'll be happy to assign one of our team to help you determine the likely damage and plan for it's risk mitigation.
d'Boss..... Ian
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d'Boss